Hedge Fund Managers worldwide are facing growing demands from investors, regulators, and counterparties to measure, manage, and disclose their portfolio risk profile, and ensure that they comply with best risk management practices.

Recent experience has clearly shown that measurement and management of extreme event and tail risk is paramount for hedge funds. Traditional market risk management applications rely on risk estimation methodologies only suitable for normal market conditions, and risk managers play a limited role in the risk measurement process. Using best-of-breed models that combine rigorous quantitative models with the risk manager's judgment and experience is essential to avoid unexpected fund "blow-ups", and to give hedge fund managers the competitive advantage necessary to provide the best possible service to investors, and ultimately, to attract and retain capital.

Since its first release in 1996, VaRworks quickly became one of the leading risk solutions chosen by hedge funds.

There are very few systems that deliver high quality risk data and analytics for desktop level implementations. VaRworks fits into your workflow as easily as any other Excel-based calculations performed on a regular basis. That means that there is no need to send your portfolios or disclose your holdings to third-parties as the risk calculations are performed internally. This represents a key benefit over ASP-type solutions and allows you to control and own the risk measurement process using a flexible calculation and reporting environment.

VaRworks open data approach allows you to create volatility and correlation datasets using Barra's, third-party or your own historical data

• Compliance with internal and external risk disclosure requirements.
• Portfolio and sub-portfolio VaR, Expected Shortfall, and Stress Test calculations.
• Extreme event estimation with Extreme Value Theory and integration of stress tests.
• Incremental and Marginal VaR Analysis.
• Risk Budgeting.
• Advanced Stress Testing and Scenario Analysis.
• Backtesting and P&L analysis tools.

A large North American hedge fund has been using FEA VaR products, VaRworks and MakeVC, as part of their Risk Management program. The client's mission is to build a successful, entrepreneurial money management firm, whose niche is developing, implementing, and managing alternative investment strategies across a broad spectrum of asset classes, including foreign exchange, global fixed income, global equities, and commodities. FEA VaRworks is regularly helping them to achieve their goals.

In yet another example, an Asset Management Firm on the West Coast of the United States uses VaRworks and MakeVC to manage the risk of a Global Equity Hedge Fund. VaRworks allows them to perform the risk analysis at the individual equity level and provides them with the ability to introduce options on equities and stock indices. Using their own data warehouse, they use FEA's volatility and correlation generation tool, MakeVC, to create custom datasets including individual equities in the analysis.

In 2003, Varworks has been selected by two leading hedge funds in the United States due to its advanced analytics, easy integration into their existing workflows, and low cost compared to FEA competitors.